Celebrating 25 Years of Scoop
Special: Up To 25% Off Scoop Pro Learn More

Search

 

Cablegate: Vietnam's Mobile Phone Sector Shows Strong Growth; Advances

VZCZCXRO6477
RR RUEHHM
DE RUEHHI #3096/01 3631102
ZNR UUUUU ZZH
R 291102Z DEC 06
FM AMEMBASSY HANOI
TO RUEHC/SECSTATE WASHDC 4232
INFO RUEHHM/AMCONSUL HO CHI MINH 2308

UNCLAS SECTION 01 OF 02 HANOI 003096

SIPDIS

SENSITIVE
SIPDIS

DEPT FOR E, EAP/MLS and EB/CIP RICH O'BRIEN
DEPT PASS TO USTR DAVID BISBEE AND JONATHAN MCHALE

E.O. 12958: N/A
TAGS: ETRD ECPS ECON KPRV VM
SUBJECT: VIETNAM'S MOBILE PHONE SECTOR SHOWS STRONG GROWTH; ADVANCES
EQUITIZATION PLANS

(U) SENSITIVE BUT UNCLASSIFIED. DO NOT POST ON THE INTERNET.

REF: A) Hanoi 1451 B) Hanoi 2477

1. (SBU) Summary: Vietnam is the world's second fastest growing
telecommunications market behind China. Mobile phone subscribers in
Vietnam are reported to now stand at 17 million, a 70 percent
increase over December 2005. Military-owned Viettel Mobile, with
more than five million subscribers, is the first true competitor to
MobiFone and Vinaphone, the two mobile subsidiaries of state-owned
telecom giant and former monopoly Vietnam Post and
Telecommunications Group (VNPT). Hanoi Telecom will become
Vietnam's sixth and newest mobile service provider by the end of
2006. The Ministry of Posts and Telematics (MPT) is moving forward
with plans to equitize the three largest mobile service providers in
2007, though delays in issuing guiding regulations may cause the
timeframe to slip. While Vietnam's mobile sector is an attractive
market for foreign investors, the issues of continued State control
of mobile companies and the lack of an independent telecom regulator
remain. End Summary.

Advertisement - scroll to continue reading

Are you getting our free newsletter?

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.

Rapid Mobile Phone Growth
-------------------------

2. (U) Vietnam is the world's second fastest growing
telecommunications market behind China. Vietnamese
telecommunication service companies reported that as of the end of
September, Vietnam has more than 17 million mobile phone
subscribers, up from 10 million subscribers in December 2005 and
twice the number from the same time last year. Observers believe
that mobile phone service companies could attract a total of 10
million new subscribers in 2006. Competition among service
providers has increased, and usage fees for customers have fallen as
the major service providers each scramble to capture a larger share
of this expanding market.

Increased Competition
---------------------

3. (SBU) Viettel Mobile, the telecom subsidiary of military-owned
Viettel Corp., announced in early October that its customer base
numbered more than five million as of two years after its founding.
Viettel Deputy General Director Le Dang Dzung informed EconOff that
Viettel aims to double this number to 10 million in 2007. The
mobile firm is also expanding into foreign markets with ongoing
operations in Cambodia, new services in Laos beginning in November
and a pending operating license application in Burma, Dzung said.
In conjunction with the November 16-19 APEC CEO Summit in Hanoi,
Viettel entered an agreement with AT&T to link the two firms'
telecom networks to support the growing number of multinational
firms operating in Vietnam.

4. (SBU) Viettel's total of five million subscribers presents the
first real competitive threat to MobiFone and Vinaphone, the mobile
phone subsidiaries of state-owned telecom giant and former monopoly
VNPT. MobiFone and Vinaphone have almost six million and five
million subscribers, respectively. Dzung believes that Viettel's
size has forced MobiFone and Vinaphone to improve their competitive
practices vis-`-vis Viettel, including improved interconnection
services between mobile networks. Comment: A much publicized
interconnection dispute between VNPT and EVN Telecom this past
summer (reftel B) indicates that VNPT's mobile subsidiaries have not
yet extended this treatment to all competitors. Vietnamese media is
reporting that VNPT contractually committed to provide better
connectivity and capacity to its competitors in early December.
Post will monitor VNPT's adherence to this agreement. End Comment.

5. (SBU) The newest market entrant, Hanoi Telecom, recently
announced it would launch its HT Mobile service by the end of 2006.
The company, a joint venture between Hanoi Telecom and Luxembourg's
Hutchison Telecom, will offer CDMA2000 technology-based mobile
services using Nortel-provided infrastructure. During the recent
APEC CEO Summit, Hanoi Telecom signed a memorandum of understanding
(MoU) with China's Unicom to share CDMA technology and products
related to value-added services. Following months of marketing,
Hanoi Telecom has attracted significant buzz among many of Hanoi's
youth, as evidenced by the frequent crowds of curious shoppers
outside the company's brand new building in Hanoi. Hanoi Telecom
has set a target of 2.9 million subscribers in its first 5-10 years.
This modest target is likely based on the tepid performance of the
market's two other CDMA-based service providers, S-Fone (one million
subscribers), and EVN Telecom (850,000 subscribers).

Equitization Moving Forward
---------------------------

6. (U) Amidst the strong growth and increased competition in the
mobile phone sector, Deputy Minister of Posts and Telematics (MPT)

HANOI 00003096 002 OF 002


Tran Duc Lai announced in October that plans to equitize MobiFone,
Vinaphone and Viettel are moving forward. MobiFone, the first
company to equitize, expects to complete its equitization plans by
the end of 2006 and go public at some (unspecified) point next year.
Vinaphone and Viettel expect to complete their plans early next
year and go public before the end of 2007. Foreign investors such
as France Telecom, Comvik (Sweden), Telenor (Norway) and several
British companies have all shown interest in the Vietnamese mobile
telephone market, particularly in MobiFone's equitization plans.

7. (SBU) The equitization process aims to reduce the State's
investment burden, develop a more competitive environment and
attract foreign technologies and management skills. The State will
continue to hold a controlling stake in each of the firms.
Viettel's Dzung estimated that his firm's equitization would occur
"mid-2007." (Note: MPT contacts suggest that this target may be
optimistic given that Viettel has yet to submit any documentation to
the relevant authorities. End Note.) Viettel intends to sell 20-25
percent of its equities to a foreign strategic partner, 10-15
percent to company employees and 10-15 percent in an IPO, with the
remaining 51 percent controlled by the military. The entire
equitization timeline in the mobile sector may be pushed back,
however, due to Government of Vietnam (GVN) delays in issuing
implementing decrees necessary to complete the asset evaluation
process. MPT's Lai was quoted in the press as saying that the
delays are due to the complex nature of a mobile network's asset
evaluation, which includes hard-to-value assets such as trademark
issues and frequency allocation.

8. (SBU) Comment: Higher levels of disposable income have enabled
more Vietnamese consumers to afford mobile phone services. This
growing market has attracted the interest of potential foreign
investors. The GVN decision to equitize the three largest mobile
firms presents an opportunity for international telecom providers to
enter this market of nearly 84 million people. Two factors,
however, may put a damper on foreign investor enthusiasm: the
State's continuing controlling interest in the equitized mobile
telecom firms and the lack of an independent telecom regulator. End
Comment.

ALOISI

© Scoop Media

Advertisement - scroll to continue reading
 
 
 
World Headlines

 
 
 
 
 
 
 
 
 
 
 
 

Join Our Free Newsletter

Subscribe to Scoop’s 'The Catch Up' our free weekly newsletter sent to your inbox every Monday with stories from across our network.